Few people find great pleasure in paying property taxes, and more than several politicians have sought elected office with grand promises of alleviating homeowners of this particular financial responsibility. But for Joan Youngman, author of the new book A Good Tax: Legal and Policy Issues for the Property Tax in the United States, the animosity aimed at property taxes has more to do with its ubiquity than any toll it takes on a homeowner’s budget.
“First and foremost, this is a very visible tax,” explained Youngman, who is an attorney and serves as a senior fellow and chairwoman of the Department of Valuation and Taxation at the Lincoln Institute in Cambridge, Mass. “You sit down once or twice a year and write out a very big check. It gets your attention and starts you to think about it. Whereas, a sales tax is different—no one know how much they pay in their sales taxes. A tax that always gets your attention is always a focus of attacks.”
Youngman traces the political targeting of property taxes to the controversial Proposition 13 movement in California in 1978.
“It was a very California story,” Youngman noted, recalling how tumult resulting from an unpopular reform of the state’s property valuation system spiraled into a populist pushback spearheaded by anti-tax activist Howard Jarvis, resulting in a voter-approved referendum that created a new limit on property tax collections.
Since the passage of Proposition 13, a number of politicians sought votes with talk about lowering or even eliminating property taxes, but Youngman observed that did not mean they were willing to cut out taxes completely.
“A lot of public officials would be happier with invisible taxes,” she said.
But the 2008 recession and the lethargic recovery that followed helped to change political opinion on property taxes.
“Sales taxes declined by double digits,” Youngman continued. “Property taxes were a fiscal lifeline for local governments.”
In her book, Youngman detailed that property taxes generate roughly $472 billion annually, with much of the money used to finance public services. She added that the intelligent use of property tax money plays a key role in determining home values.
“That is one of the great benefits of the property tax’s visibility,” she said. “People know if the tax revenue is spent wisely on good public services, it has an effect on property values. After all, an excellent school system benefits everyone, even those who do not have children in school—it helps make a community to be a more attractive place to live. Conversely, high property taxes that are not spent well can sound an alarm bell.”
Youngman also observed that property taxes play an important role in preventing would-be homeowners from borrowing beyond their means.
“People who make a major life purchase like a house are aware of all costs,” Youngman said. “If there is a change in taxes, that could make a different in choosing that house or in choosing to move somewhere else.”
